VW’s “Dieselgate” Ruthless Criticism

Translation of a February 28, 2018 lecture held in Regensburg, Germany by GegenStandpunkt

VW’s “Dieselgate”:
How are the auto industry, the state, and animal testing connected?

The situation:

Not just VW, but the other large car companies are poisoning the environment with their compression ignition/diesel-engine vehicles many times above what government limit values permit. Cheating software was invented for covering up the process. Millions of customers bought cars that did not have a valid road registration because these cars do not meet the standards that are guaranteed and required. That’s a lot of criminal intent for a German flagship company. That’s remarkable. But no less remarkable is the way the German state has dealt with this affair: this fraud was exposed in the USA and VW is paying for having violated the law. In the EU, especially in Germany, $23 billion is not being demanded, nor so much as a retrofit of these cars or even compensation for the customers, nor, as one might expect after a violation of the law on this scale, a fine being imposed or a trial held. Instead, the politicians have set up a car summit with the explicit purpose of promoting renewed confidence in the auto industry. That’s a remarkable way to deal with a company that has acted like a criminal organization. VW mutates from the perpetrator to the victim, and the image of VW gets a make-over.

How could this happen? On this question, there are two explanations in public circulation, although they contradict each other:

1. “The state just wasn’t paying attention.”

The state is seen as an unsuspecting outsider that somehow let the whole event slip by. If this sigh is taken at face value, it does not put the economy in a good light. Because anyone who calls for the state to be alert so that poisoning does not get out of hand assumes that the economy on its own will do nothing to protect people’s health from such effects. That’s the reason it needs supervision. So the state wasn’t paying attention. On the other hand, is it really tenable to write off the issue this way? After all, the whole existence of limit values, which were exceeded by a factor of 30, 40, 50, is already proof that the state is very careful, sets standards, and does not stand on the sidelines in a way that lets all this pass by. So this first view tries to detach the state from the whole affair.

2. The other view reverses the relation: “This whole disaster stems from the fact that the state and the auto industry are in cahoots.”

The real evil is the state’s far too cozy relations with the auto industry. In the first explanation, the state is detached from the economy as if it has nothing to do with it, while the second argues that the state and the economy work hand in glove and are in league together. This can’t be the truth either. The limit values that are always talked about are requirements that a state imposes on industry. The governmentally enacted limits are not desired by the industrialists or what they would introduce on their own. Compliance with such limits creates costs and they want to avoid them.

These two strange theories on one hand exculpate the state – it has nothing to do with this whole industry – and on the other simply identify it with the workings of the economy. The two don’t add up, so we would like to offer a few arguments that first look at the real relation, the cooperation, between state and auto industry, and second, make a transition to the world market, to the USA.

Cooperation between the state and the auto industry

The social need for mobility is not an invention of various private individuals, but is essentially determined by the capitalist needs of a market economy and its companies. On the one hand, there is the need of companies to move their commodities. They want to be supplied cheaply and promptly, preferably “just in time,” with the result that the highways are something like moving warehouses with trucks always using the right lane. On the other hand, millions of working people fill the highways with their vehicles for their needs. Capital, with its huge business and administrative centers, spreads out into urban agglomerations with the result that prices in these agglomerations are pushed so high due to the strong demand for real estate and rented space that a major proportion of the working population tries to avoid these rent increases by either moving to the suburbs or to the countryside, with the result that every day, in addition to capital moving its commodities, there are millions of commuters populating the highways with their cars.

This type of traffic is produced by capitalistic calculations with transportation. This includes the movement of commodities as well as individual transportation. The state respects this, and it wants it this way. To this end, it pursues transportation policies and makes the car a ubiquitous vehicle by promoting highway expansion to keep up with this demand and opening up the last rural backwater to roads. In this way, the mass demand for cars, which is created by the market economy, is politically supplemented by regional development. This is the only way to create the enormous business foundation that a car industry does business with. Only then can it sell millions of cars because they are not only needed, but because the state opens room for them.

To the extent that the car industry makes use of this business foundation, it has become something like

a key industry.

What this means is that auto is not just one capital the among many that exist in a business location, but that it is such a dominant huge capital that thousands of suppliers make money from it, millions of jobs are dependent on it, and therefore the state budget is significantly endowed by this industry and its products. The state thus creates the elementary prerequisites so that the auto business can become something like a key industry for the nation.

Environmental degradation increases along with the business this industry then does. The state is aware of the various toxins that come out of exhaust pipes: CO2, nitrogen dioxide, particulate matter, etc. All these values are carefully measured. None of this is unknown.

Why is the state so keen on knowing exactly how much CO2 is emitted per 100 km, how much nitrogen oxide is released into the environment by one car? Because it comes down to an assessment of the effects of environmental degradation on public health! In this case, X tons of particulate matter or nitrogen oxide are set into relation with Y 1,000 respiratory or cardiovascular diseases. This is meticulously accurate. An example from the Federal Environment Agency:

The health consequences of particulate matter on the population are determined by estimating the burden of illness and the results are used to evaluate, among other things, the effects of measures to improve outside air quality. The estimate concludes that an average of 44,900 premature deaths due to particulate matter occurred annually in the period 2007-2015.

An example of how lovingly, down to the last detail, the ratios are enumerated: how much environmental toxin corresponds to how much illness or damage to health.

But that’s not all. These ratios are collected and measured because the state is concerned about limits values. It defines limits: how much of which poison should be allowed and how much of the burden of illness induced by this poison has to be accepted. The limit values are therefore not what they are sometimes imagined to be, the avoidance of poisoning, but limit values are the dosing of poisoning in such a way that business can sustainably continue without causing the immediate ruination of the working population.

These are two conflicting objectives that are constantly weighed against each other. On the one hand, for example, CO2 emissions are to be curbed for reasons of public health, but on the other hand in such a way that companies’ return on investment suffers as little as possible. Stricter limits always mean additional development costs, i.e. loss of profits.

Once the state has decided on limit values, it still reflects on their effect on growth, and seeks to reduce the worst effects with

creative loopholes

where necessary. For example: in Germany, CO2 limits are not simply set, but are granted for auto fleet consumption. What this means is that the big heavy limousines in the premium segment that emit especially large amounts of CO2 or NOx should stay in business. For this reason, the limit value only has to be met on average for an entire fleet of automobiles. With a sufficient number of small cars, a company can compensate for the large cars that clearly exceed the limit values.

This limit value policy proves that the state neither looks the other way nor simply makes itself one with the car industry. It sets limits because it pursues its own interest. The state wants both: that auto capital continues to grow and that the viable preservation of the working people necessary for it remains halfway guaranteed.

The state wants a restriction on business in order to make business sustainable. Once this becomes problematic, the state is also prepared to reverse limit values.

Here is a quote from someone who has distinguished himself on this question, Christian Lindner of the Free Democratic Party of Germany:

If you work in an office, you may sustainably inhale a lot more nitrogen oxide than is permitted on the street for a short while. This shows that these limit values are not religion or truth, but political decisions. That’s why there must now be a debate about whether the limit values are really proportionate. There are many levers that could be pulled short of vehicle bans.

When he points out that in many workplaces, CO2 pollution is significantly higher than in street traffic, he first admits: a limit value is not the value up to which health remains unimpaired; otherwise it could not be the case that much higher CO2 values can be measured in workplaces than in road traffic. Other calculations must be involved in terms of operating costs. If this is so, then limit values are not something like a scientific certificate of good standing – that up to this point everything is ok for health – but a political determination that has the aim of dosing health deterioration in such a way that business can continue sustainably without turning into the instant ruin of the population.

Lindner implicitly states all this in order to say: if it is true that limit values originate from this political intention, then one should not be coy and just raise the limit values before one ends up with vehicle bans on the automotive business in order to comply with limit values because one could just as well set them differently. He argues for more wear and tear on human health in order to protect the health of the car industry from vehicular bans. That’s the harsh logic of government regulations. It does not necessarily require the role of the car lobby.

But that still exists and, because there are so many misconceptions about it, a word must be said about

the auto lobby

They have a bad reputation and the automobile lobby is often cited as proof that the state and the industry are ultimately identical, in collusion, or that the state is controlled by the car lobby. If it were true that that the state just dances to the tune of the lobby, then the auto companies would not have to go to the trouble of paying representatives to charge through the open doors of the ministries to argue with them about how to set limit values. If the car lobby has been pulling the strings all along, then there would be no need to constantly exert influence on the state. But they do this, and the state also listens to what the lobbyists have to say. It wants to know from the brothers what is technically feasible, what costs and possible drops in profit calculations can be expected if certain solutions are adopted, and where corrections are unavoidable because of the burden of illness and because of the common good. Between these two sectors – here the representatives of the auto industry, there those of the state – a balance takes place between the interests of capital and the common good and public health. In this dispute, the state allows itself to be presented with data before ultimately making a decision at its own discretion. Hence, a lobby is not what it is taken for, that is, something like an anti-democratic element that bends the content of democracy. The lobby is itself a moment of democracy, specifically designed to allow industry to submit its considerations and interests to the state, and the state reserves final decision on this.

In this struggle over proper limit values,

animal experiments

play their role. This briefly fell into disrepute because the newspapers reported that some institutions had put monkeys in front of exhaust pipes. This temporarily led to a moral outrage about how anyone could irradiate monkeys with CO2, and the outrage over these animal experiments completely pushed into the background the fact that a permanent experiment is taking place every day on millions of people. The outrage was about the monkeys because they apparently enjoy the reputation of being innocent objects who were put in front of these exhaust pipes for data collection, while the verdict about humans is apparently that, although a continuous experiment is conducted on them with NOx and CO2, they can at least count themselves not just as victims but also as perpetrators because, after all, they drive around the country with these automobiles and pollute the environment. As if motorists were really the primary subject of transportation policy and emission values, and as if industry and the politicians are attending to them! That’s what was unreasonable about this short-lived uproar.

Objectively: why are there animal experiments? Is it allowed? Yes, it is allowed; as a matter of fact, it is intended. These institutions intend to use animal experiments to measure how much damage to an organism can be detected by exposing a living organism to x thousand mg of CO2 or NOx or particulate matter. They want to precisely determine and measure this because it is a matter of collecting data for setting national limit values. Because industry is happy to help with data that testifies in its favor in this power struggle, it is not only done by state institutions but also by private institutions in the auto industry, so that in the end the state can decide which values it rates higher allowances.

Result: The need for clean air in this country is worth exactly as much as the politicians concede in relation to growth. The results can be read on the internet, in the daily newspapers, on Wikipedia: 400,000 NOx deaths per year are normal; 70 large cities are choking in smog and have violated almost every EU limit since 2010.

That is the situation in this country. But the issue is not confined here. The German automotive industry, a showcase industry, is a worldwide business. VW and companies like it produce from the inception for the world market. If you had the opportunity to look at an aerial photograph, it would be absurd: car flows are going from Europe to the USA; conversely, car flows are coming from the USA to Europe. Not because there is a lack of cars in one of these locations, but vice versa: there are way more cars in this location than can be sold here and vice versa, many more cars are produced in the USA than can be sold there.

Every business location hosting a real automotive capital produces significantly more than for its own location. It produces for the world market. That’s because the enormous size of the auto capitals inherently requires significantly more than its domestic market in order to be able to sell the vast number of units that are needed to make the huge investments in the plants profitable. This growth, which the auto companies of this world lead against each other, leads to the fact that the world market is permanently overcrowded. This has its own term:

overcapacity.

It is well-known that in the auto market there is more capacity in the form of factories in operation than they are all able to sell their full number of units at their calculated profit, because they are dealing with counterparts who are pursuing the exact same calculation against the all the rest. That’s why there is a fierce competition raging on the car market over the question of who can occupy the markets and who can knock another big company out of the race.

It is interesting to see how this competition is carried out. What are the weapons in this competitive struggle between the big car companies? Of course, on the one hand, as always, the quality of the product; on the other, the price of the product, which must be measured by what other manufacturers are offering.Thirdly, however, the environmental standards that cars meet or fail to meet is proving to be a decisive weapon.

Environmental standards themselves are no longer just a matter of regulating the environmental pollution that the automotive industry and its companions are putting on the roads. They have become a tool in the competitive struggle between big companies. In the EU, the issue has been handled like this: the politicians have set strict rules for CO2, also with regard to the climate targets, and have allowed very lax NOx levels because of the costs this creates for industry. On the EU market, CO2 reduction is taken seriously, while nitrogen oxide is largely given a great deal of latitude to keep the costs for companies within limits.

VW’s clean diesel became a major market blockbuster in the EU, conquering a 50% market share, and an unintended effect was connected with this requirement – keeping down CO2 values, but comparatively looser NOx values: this regulation made it possible to mostly keep the big gas guzzlers from the USA out of the European market because the big gas guzzlers from the USA produce very high CO2 emissions and have to meet much stricter requirements for NOx values.

The USA has a regime where high CO2 levels are permitted so that Americans’ big luxury sedans can hit the roads, while NOx levels are strictly managed so that diesel passenger cars are virtually unmarketable in the USA. VW wanted to change this and break into this market by making clean diesel a hit in America, and it advertised in America with a German word: simply “das Auto.” It was to be considered the epitome of “the car” because it fulfilled what was considered impossible in America, namely, meeting very strict specifications for NOx and therefore becoming the new showpiece car in the USA.

VW had no intention of really complying with the requirements of the USA, so it pretended to be able to comply with the low limit values for nitrogen oxide by using its cheating software. Of course, only at the test station. As soon as the car was on the road, the emission control was switched off. So it was only through this fraud that VW’s environmental standard could be effective as a tool in the competition. The same fraud as in Germany with one difference: the USA did not let VW get away with it. In the USA, this was uncovered, and it did not at all meet with the sympathy that exists here in Germany. The US state took the position that its environmental standards – high CO2 values, low NOx values – keeps unwanted auto capital, unwanted competition, away from its business location. VW was caught cheating and is being severely punished because this is how the American state defends its auto capital against a European intruder.

In Germany, VW has been treated quite differently. The perpetrator has become a victim and the politicians have taken the position that the politically-based corporate strategy of generating growth in the USA by pretending to comply with environmental standards that cannot be complied with has been downgraded into the missteps of a few VW employees, so that the company looks as if it has been harmed by the misconduct of a number of individuals. The only reason for this treatment is that this auto capital represents a key industry for this business location, it is essential for growth as well as for the budget, so this capital must not be damaged. The result of this somewhat paradoxical situation is that the company is mostly exempt from any material claims, that a software update is offered instead of material retrofitting, and that millions of customers are left sitting on cars that have lost significant value. Vice versa, in rationalizing its workforce, VW is held blameless because it has to pay fines in America which the German state is powerless against.

Discussion

- What can you do as an individual except not drive a car?

How is that an action against it?

- Then you do not emit exhaust fumes.

These types of thoughts that come to mind spontaneously somehow miss the mark when they ask “what can I do personally?” Suppose you take the position that you will not drive a car and ride a bicycle or the bus instead. The fact that you immediately realize its only you is not because the rest of humanity has bad intentions. The decision whether to use a car is not such a simple choice for most people. It’s how the millions of commuters we talked about handle the distance between home and job. Very narrow limits are set on freedom when giving up driving a car, especially when there is no public transportation that goes to the suburbs or rural areas because the state does not provide the money for it. In this respect, you are confronted with the way mobility is organized in this society, how far that exceeds what any individual can do on their own, how one moves in traffic, whether with or without a car, by bicycle or by bus. You are confronted with necessities that you can’t escape, that are given to you by place of residence, by the job, and then by an industry that makes the automobiles suitable for this with its pollution values.

- I feel powerless because everything the politicians do is influenced by the lobby. What can one try to change?

The first offer we are making with discussions like this is to form a judgement as to why the issue of transportation and environmental pollution looks the way it does. And the other question, whether the lever to change all this would be on hand along with the insight, is a completely different question. Of course, this is not the case. The insight into the reasons why the state promotes an automobile industry that is poisoning the lungs of its inhabitants is not the same as: the reason has been eliminated.

- What else could be the reason that the health aspect did not play a role in the public discussion? This was not in the foreground, only the costs for VW. Even the people you talk to have no idea that pollution might have something to do with diesel cars.

This testifies to how hardened a people are in this business location, that they just assume this environmental pollution is a standard in our lives. They’ve come to terms with that.

Another reason is that we must not damage our car industry because so many jobs depend on it. That makes sense to people because they are dependent on the job for their existence. That the people who were damaged do not insist on compensation from VW because they know that they are dependent on the car industry and everything that goes with it. This is solely because of the capitalist organization of this society, and not a matter of course, but rather testifies to the fact that one has become accustomed to accepting these conditions – a hint for the question: “What can one do?”

- Shouldn’t the interests of VW shareholders actually be compatible with those of people who want to breathe without being poisoned?

VW as a group of companies is a double thing for people: on the one hand, they see the company as the culprit which, with its cars not meeting the limit values, has damaged the many people who bought these cars. On the other hand, the same company is a job creator that the working population and the suppliers are dependent on, so for the same reason that the VW group, morally speaking, is given a penalty flag for its environmental toxins, it is also an entrepreneur who we hope will get out of this crisis as unscathed as possible because the growth of the location, the number of jobs, and in the end what happens on the stock market, all depend on it.

It is not even much of an insight that people who as investors have seen a decline in VW shares are waiting for a period of time to see whether VW will recover from the fines in the USA or whether it has to expect similar payments in Europe. And VW made 11.5 billion plus with its automobiles in 2017 last year. Everyone who buys VW shares is now speculating on this. The company is emerging relatively stronger from this disaster, and is a growth engine that has overtaken Toyota, so they are investing in the securities of this company. Money is made from it. This is a positive interest in the company. They are counting on the company being a money maker.